Oil falls on disappointing euro zone data

Oil prices fell on Thursday after euro zone figures showed the world's No. 1 trading bloc sank deeper into recession at the end of last year, curbing expectations of accelerating global growth and higher energy demand.

Sentiment was slightly boosted after data showed a stronger-than-expected drop in U.S. jobless claims last week.

Brent crude oil slipped 28 cents to $117.60 per barrel by 1415 GMT. April Brent futures became the front-month contract on Thursday. U.S. crude rose 44 cents to $97.45.

"The market has weakened because of the GDP numbers," said Barclays commodities analyst Miswin Mahesh. "It's been a macro sell-off this morning with the GDP numbers coming out rather than any fundamental move in itself. Most asset classes have sold."

Economic output in the euro zone fell 0.6 percent in the final quarter of 2012, according to the EU's statistics office, compared with a decline of 0.4 percent expected by analysts polled by Reuters.

Data showed the three biggest economies in the euro zone -Germany, France and Italy - all shrank more than expected.

The German economy contracted by 0.6 percent, its worst performance since the global financial crisis was raging in 2009 and well below analysts' forecasts.

Unemployment data from the United States, the world's top oil consumer, offered limited support to oil prices. The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a continued steady improvement in labour market conditions.

The U.S. data "comes as no surprise, we've been seeing that the recovery is under way there," said Christopher Bellew, analyst at Jefferies Bache.

IRAN

Worries over Middle East oil supplies also limited the price fall after the U.N. nuclear watchdog said it failed again to clinch a deal in talks with Iran on investigating its nuclear programme.

"All the discussions about Iran are keeping oil high while it looks like China and the U.S. are growing which is further supporting prices," Thorbjoern Bak Jensen, analyst at Copenhagen-based Global Risk Management, said.

"However, lower growth in Europe will dampen oil demand."

Investors are now waiting for the outcome of the meeting of finance ministers and central bankers of the G20 countries later this week which may throw more light on the outlook for the global economy.

Optimism that oil consumption will increase as the economy revives has been offset this week by a report from the West's energy watchdog, the International Energy Agency (IEA).

The IEA on Wednesday cut its 2013 oil demand growth forecast by 90,000 barrels per day (bpd) to 840,000 bpd, contradicting assessments of two other oil market forecasting agencies.

The U.S. Energy Information Administration and the 12-member Organization of the Petroleum Exporting Countries both this week forecast faster-than-expected growth in global oil demand this year. (Additional reporting by Ramya Venugopal in Singapore; Editing by Louise Ireland)